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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
Humanity's pursuit of greatness meets the reality of finite resources
In The Frugal Economy: A Guide to Building a Better World With Less, award-winning author Navi Radjou delivers an incisive and engrossing treatment of how human beings facing climate change can reconcile our built-in drive to “do more” and “be better” with our planet's finite resources. You'll discover how we can thrive within planetary boundaries while achieving sustainable growth for generations to come.
In this groundbreaking book, enriched with over 100 inspiring examples, you'll learn how to create greater value with less and find:
- Practical strategies for doing more with less, benefiting both people and the planet
- Success stories of businesses fueling transformative megatrends like B2B sharing, distributed manufacturing, and triple regeneration
- Insights into reshaping economic systems to promote social and ecological harmony
Whether you're a businessperson, professional, student, academic, policymaker, regulator, or entrepreneur, you can join the movement towards a sustainable future. Get your copy of The Frugal Economy today and become a catalyst for positive change!
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Seitenzahl: 352
Veröffentlichungsjahr: 2024
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Table of Contents
Cover
Table of Contents
About Thinkers50
Title Page
Copyright
Dedication
Introduction: Respect and Break All Limits
CHAPTER 1: Doing Better with Less
PART I: The B2B Sharing Revolution
CHAPTER 2: The Big Benefits of B2B Sharing
B2B Sharing Boosts Business Efficiency, Agility, and Innovation
The Social and Ecological Benefits of B2B Sharing
CHAPTER 3: Mastering B2B Sharing
Level 1: Sharing Waste and Discarded Resources
Level 2: Sharing Physical Assets
Level 3: Sharing Purchasing Power
Level 4: Sharing Employees
Level 5: Sharing Clients
Level 6: Sharing Intellectual Property and Knowledge
Mastering the Full Spectrum
CHAPTER 4: From Smart Sharing to Wise Sharing
Value Versus Values
Achieving SDGs Faster, Better, Cheaper
PART II: Distributed Manufacturing and Hyper-Local Value Networks
CHAPTER 5: Scaling Out Manufacturing
9/11, COVID-19, and the Need for Adaptive Supply Networks
Scaling Out Versus Scaling Up
Scaling Out Auto Manufacturing to Maximize Local Impact
Scaling Out Energy Generation to Build Sustainable Communities
CHAPTER 6: Scaling Out Next-Gen Virtuous Economies
Turning Waste into Gold
Curing Our Fossil Fuel Addiction with the Bioeconomy
Enhancing Lives Through Personalized Medicine
Capturing and UsingCO
2
to Create Local Value
CHAPTER 7: Hyper-Local Value Networks
The Value Chain Fails to Engage “Prosumers”
The Value Chain Doesn’t Favor External Collaboration
The Value Chain Is Optimized for Efficiency and Not Adaptability
The Value Chain Is Too Complex to Decarbonize and Reach Net Zero
PART III: Regenerating People, Places, and the Planet
CHAPTER 8: The Rise of Regenerative Businesses
Regenerative Businesses Do More Good
CHAPTER 9: Regenerative Development
Expanding Awareness and Acting Consciously
Regenerating the Spirit of a Broken Town
CHAPTER 10: How Businesses Can Lead Triple Regeneration
Humanizing Regeneration and Anchoring It in Places
Boosting Corporate Vitality and Longevity Through Triple Regeneration
Meiji Yasuda Boosts Your Vitality Rather Than Insuring Against Mortality
Beyond Sustainable Fashion: Eileen Fisher Leads Triple Regeneration
PART IV: Frugal America
CHAPTER 11: The US Must Lead by Example
A Pioneer in Frugal Health Care
Empowering Women Through Grassroots Entrepreneurship
CHAPTER 12: Let 3,143 Frugal Economies Blossom
B2B Sharing: Replacing Competition with Cooperation
Distributed Manufacturing: Unleashing Hyper-Local Opportunities
Triple Regeneration: Revitalizing the Soul of the Heartland
Conclusion: The Rise of Frugal Natives
Notes
Introduction
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Chapter 10
Chapter 11
Chapter 12
Conclusion
Acknowledgments
About the Author
Index
End User License Agreement
List of Illustrations
Introduction: Respect and Break All Limits
Figure I.1 The nine planetary boundaries defined in 2009 by a group of scien...
Figure I.2 The seven virtues, which counterbalance the seven sins, form the ...
Figure I.3 A frugal economy enables you to consciously surpass yourself with...
Chapter 1
Figure 1.1 Today’s growth model is not working because it excludes people an...
Figure 1.2 Decoupling aims to generate more economic growth while limiting a...
Figure 1.3 Rather than mindlessly pursue unbridled economic growth, regenera...
Figure 1.4 Conscious customers and innovators fuel the rise of a frugal econ...
Chapter 2
Figure 2.1 B2B sharing could dwarf the C2C sharing economy in volume and val...
Chapter 3
Figure 3.1 Firms can co-build trust and cocreate greater value by sharing a ...
Figure 3.2 Leading firms will master the whole spectrum of B2B sharing to ca...
Chapter 4
Figure 4.1 Wise sharing, connected to a noble purpose, can deliver greater i...
Figure 4.2 The Sustainable Development Goals (SDGs) are a collection of 17 g...
Chapter 5
Figure 5.1 Scaling out manufacturing enables firms to produce flexibly close...
Chapter 6
Figure 6.1 AFYREN’s biorefinery is located close to suppliers and customers....
Figure 6.2 Carbontech firms create more social and economic value while remo...
Chapter 7
Figure 7.1 The growing value(s) gap between supply and demand.
Figure 7.2 A value chain is a linked set of activities to create and bring a...
Figure 7.3 Globalization devalued manufacturing in the eyes of the Western w...
Figure 7.4 Reshoring can redeem manufacturing and make it as valuable as R&D...
Figure 7.5 Options and opportunities for carbon dioxide removal (CDR) in all...
Figure 7.6 A HYLOVAN uses open and agile processes to engage with a diverse ...
Chapter 8
Figure 8.1 Sustainable development, also known as decoupling, aims to create...
Figure 8.2 A regenerative business increases its social and ecological handp...
Chapter 9
Figure 9.1 A statue of Shiva performing the cosmic dance stands majestically...
Figure 9.2 Regenerative development gradually raises human awareness and exp...
Chapter 10
Figure 10.1 By revitalizing people, places, and the planet, triple regenerat...
Chapter 11
Figure 11.1 This bubble diagram highlights the percentage share of global cu...
Figure 11.2 A frugal economy in the US will leverage the American innovation...
Chapter 12
Figure 12.1 Overall employment carbon footprints (ECFs) in metric tonnes of ...
Guide
Cover
Table of Contents
About Thinkers50
Title Page
Copyright
Dedication
Introduction: Respect and Break All Limits
Begin Reading
Conclusion: The Rise of Frugal Natives
Notes
Acknowledgments
About the Author
Index
End User License Agreement
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THE FRUGAL ECONOMY
A GUIDE TO BUILDING A BETTER WORLD WITH LESS
NAVI RADJOU
BESTSELLING COAUTHOR OF JUGAAD INNOVATION
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Library of Congress Cataloging-in-Publication Data
Names: Radjou, Navi, author. | John Wiley & Sons, publisher.
Title: The frugal economy : a guide to building a better world with less / Navi Radjou.
Description: Hoboken, New Jersey : Wiley, [2024] | Includes index.
Identifiers: LCCN 2024020708 (print) | LCCN 2024020709 (ebook) | ISBN 9781394273058 (hardback) | ISBN 9781394273072 (adobe pdf) | ISBN 9781394273065 (epub)
Subjects: LCSH: Sustainable development. | Sustainable living.
Classification: LCC HC79.E5 R334 2024 (print) | LCC HC79.E5 (ebook) | DDC 338.973/07—dc23/eng/20240601
LC record available at https://lccn.loc.gov/2024020708
LC ebook record available at https://lccn.loc.gov/2024020709
Cover Design: Wiley
Cover Image: © amtitus/Getty Images
“The way to wealth is as plain as the way to market.It depends chiefly on two words, industry and frugality:that is, waste neither time nor money, but make the best use of both.Without industry and frugality nothing will do; with them, everything.”
—Benjamin Franklin
“Nothing is lost, nothing is created, everything is transformed.”
—Antoine Lavoisier
oṃ
pūrṇam adaḥ pūrṇam idam
pūrṇāt pūrṇam udacyate
pūrṇasya pūrṇam ādāya
pūrṇam evāvaśiṣyate
oṃ śāntiḥ śāntiḥ śāntiḥ
om
That is Infinite, this is infinite
this infinite arises from That Infinite
when this infinite is taken from or added to That Infinite
Infinite only remains
om peace peace peace
—Isha Upanishad / shlokam
Introduction: Respect and Break All Limits
These days, the media is awash with alarmist headlines like “Humans have crossed six of the nine planetary boundaries that make Earth habitable” (see Figure I.1).1 Altogether, these nine ecological boundaries “define a safe operating space for humanity” (the green zone that appears as a sphere in Figure I.1) that should not be exceeded if we wish to maintain stable conditions on Earth.2
Consequently, businesses are asked to “respect planetary boundaries” and injunctions are issued to “link planetary boundaries to business.”
There is no doubt that rapid economic growth and intensified agriculture and industrialization have depleted our planet’s natural resources, acidified our oceans, polluted our atmosphere, and degraded our biodiversity.3
As climate change worsens, businesses bear a moral responsibility to respect the planetary boundaries and reduce the “negative externalities” of their economic activities. This is why all businesses are now being asked to do LESS (harm).
But here is the big problem: we humans are not born to do LESS. We are wired to do MORE.
Nothing in Nature is designed to do less. All creatures on Earth are animated by an evolutionary need to do – and be(come) – more.
Three and a half billion years ago, Earth was filled with single-celled organisms that were able to survive on their own. Yet, these unicellular life forms were driven to do – and be – more. They were animated by what the French philosopher Henri Bergson called the élan vital, a mysterious vital impulse immanent within all life forms that compels them to keep evolving. So these individual cells aggregated together to form multicellular groups – starting with fungi, then animals, and finally us humans.
Figure I.1 The nine planetary boundaries defined in 2009 by a group of scientists led by Johan Rockström altogether delineate a safe operating space (the green zone that appears as a sphere above) for humans. In 2023, scientists found that six of these nine limits have already been transgressed as depicted in red.
Source: Adapted from Richardson et al., 2023.
You are reading this sentence because your unicellular ancestors evolved and adapted to do more and better.
If you and I were to do LESS, we would be regressing back to the single-cell stage (which will be an insult to our ambitious mono-celled ancestors)!
What drives us to do more and be better? It is our desire to surpass ourselves and break the limits.
In 2014, I delivered a TED Talk titled “Creative Problem-Solving in the Face of Extreme Limits.”4
I showed how millions of entrepreneurs in emerging markets in India, Africa, and South America overcome the scarcity of resources and use their jugaad (ingenuity in Hindi) to innovate faster, better, and cheaper. I explained how when you put a limitation on resources, you remove the limitation on creativity.5
Likewise, athletes, like those who participate in the Olympic games, are born to break the physical limits. “No limits for Usain (Bolt)” is how the Maths and Sport website described Usain Bolt, the “fastest man on the planet” who kept breaking his own 100-meter (sprint) world record.6 Bolt didn’t respect the planetary limit … for running fast! Scientists also don’t believe “the sky is the limit” for their exploration. Otherwise, we would never have landed a man on the moon in 1969!
You get my point.
Certain limits – like planetary boundaries – are worth respecting and you need to “play within (those) limits” and DO LESS. But other limits – physical, mental, scientific – need to be crossed to push out the boundaries of what humans can achieve, so we can DO MORE. Especially, we need to break our self-limiting belief that “we are all small” and strive to BE MORE.
Spiritual traditions understood well human psychology. Christianity’s 10 Commandments, which relate to ethics, are mostly about limits not to cross. That’s why 8 of the 10 commandments begin with “Thou shall NOT” to restrict what we can do.
Yet, akin to modern management thinkers (like me) who believe in “incentive systems,” the Biblical leaders knew that morality and ethics in spirituality shouldn’t just be punitive (“you will be chastened if you do X”); they also need to be rewarding (“you will be blessed if you do Y”). This is why Christianity identifies the seven deadly sins (vices) we must avoid (“do less”) as well as the seven virtues we need to actively cultivate and practice (“do more”). See Figure I.2.7
From a Christian perspective – as well as a Hindu and Buddhist viewpoint – leading a frugal life consists in doing less harm (to people and Nature) as well as doing good (to others). A frugal life is about living better with less.
Figure I.2 The seven virtues, which counterbalance the seven sins, form the basis of Christian ethics and offer humans a moral compass for leading an honorable life.
At this point, we need to revisit the evolutionary need of all creatures – including humans – to “do more.” In fact, we aspire to not just do more, but “be” more. We want to break all physical and mental limits so we can experience … infinity.
All humans’ spiritual desire – that’s what it is all about – to reach infinity is beautifully captured in the very popular Hindu mantra (in Sanskrit):
Om Asato Maa Sad-Gamaya
Tamaso Maa Jyotir-Gamaya
Mrtyor-Maa Amrtam Gamaya
Om Shaantih Shaantih Shaantih
which translates into
O Lord, Lead me from (the phenomenal world of) Unreality to the Reality (of Eternal Self)
Lead me from the Darkness (of Ignorance) toward the Light (of Spiritual Awareness)
Lead me from this world of Mortality (world of Material Attachment) to the world of Immortality (of Self-Realization)
Om, Peace, Peace, Peace.
This all sounds very nice.
Here is, however, the dilemma: we yearn to experience infinity while living on a … finite planet.
How do we resolve this quandary? By becoming aware of two things:
“Infinite economic growth on a finite planet” is not sustainable.
“Infinite development of
human potential
on a finite planet”
is
possible and worth pursuing as a noble goal.
Alas, gaining this awareness alone isn’t enough. We need to fundamentally change our economic system, so it delivers a qualitatively different kind of growth that benefits all humans and enhances social and ecological harmony.
We must build a frugal economy that does better with less.
Figure I.3 A frugal economy enables you to consciously surpass yourself within ecological limits.
A frugal economy will raise and expand our consciousness so we can all stretch our mental and psychic limits and become better human beings while harming less our environment and respecting the planetary limits. See Figure I.3.
The Stockholm Resilience Centre defines the planetary boundaries as “a set of nine planetary boundaries within which humanity can continue to develop and thrive for generations to come.”8
A frugal economy will enable humanity to wisely “continue to develop and thrive for generations to come” while “playing” within the boundaries of our collective home: Earth.
CHAPTER 1Doing Better with Less
In its March 2023 report, the World Bank warned that the economic forces that powered progress and prosperity over the last three decades are vanishing: “Between 2022 and 2030 average global potential GDP growth is expected to decline by roughly a third from the rate that prevailed in the first decade of this century – to 2.2% a year. For developing economies, the decline will be equally steep: from 6% a year between 2000 and 2010 to 4% a year over the remainder of this decade. These declines would be much steeper in the event of a global financial crisis or a recession.”1
“A lost decade could be in the making for the global economy,” presages Indermit Gill, chief economist of the World Bank.
The bank also offers suggestions for reversing this decline. “The global economy’s speed limit can be raised – through policies that incentivize work, increase productivity, and accelerate investment.”2
Unfortunately, these suggestions focus on increasing quantitively the economic growth of nations – as measured by GDP – without improving the quality of growth.
Today, we are all aware that the current growth model is not effective because it overexploits and depletes natural resources – aggravating climate change – and excludes people – worsening social inequalities. See Figure 1.1.
Figure 1.1 Today’s growth model is not working because it excludes people and depletes resources.
Here is some shocking evidence to the fact that today’s growth model is not working:
In 2023, Earth Overshoot Day (EOD) – the date when humanity’s demand for ecological resources and services in a given year exceeds what Earth can regenerate in that year – was on August 2.
3
In 2003, the EOD was September 12. We are borrowing (stealing, actually) more and more from our (ecological) future to fuel our economic growth, which is not sustainable.
In the US, the richest economy in the world, 56% of adults are unable to cover a $1,000 emergency expense, according to Bankrate’s 2024 annual emergency savings report.
4
In Europe, nearly 100 million citizens are at risk of poverty and social exclusion, which is about 22% of the total population.
5
In France, a disabled person today is three times less likely than others to find a job. Female entrepreneurs are 63% less likely than men to obtain venture capital (VC) financing.
6
In the US, black women receive less than 0.35% of all VC funding.
7
Given this bleak scenario, experts are coming up with alternative growth models that claim to be more virtuous. A popular alternative much touted today is decoupling, whereby “continued growth in the economy is accompanied by a further contraction in CO2 emissions.”8
This so-called green growth model based on decoupling calls for companies to “do more with less,” that is, keep producing more goods and services while “decarbonizing” their supply chains (see Figure 1.2).
In his book aptly titled More from Less, Andrew McAfee, a research scientist at MIT Sloan School of Management, argues that this decoupling has already occurred in the US. McAfee’s book shows how the US has been able to increase productivity and drive more economic growth using fewer physical inputs since the first Earth Day in 1970. According to McAfee, “evidence from America shows that even though population and prosperity continued to increase steadily in the years after Earth Day (1970), resource consumption did not. Instead, it started to decline. The country now generally uses less metal, fertilizer, water, paper and timber, and energy year after year,” even as output increases.9 McAfee points to America’s decoupling, that is the country’s capacity to do “more from less,” as evidence of the dematerialization of the US economy. In the same vein, proponents of the so-called circular economy today argue that we can do “more from less” by efficiently reusing and recycling existing resources and materials, instead of extracting more virgin materials from our depleted Earth.
Although decoupling could reduce the negative ecological impact of businesses, by curbing their emissions and resource consumption, it doesn’t incentivize companies to radically change their existing business models or positively contribute to society.
Figure 1.2 Decoupling aims to generate more economic growth while limiting and even reducing negative environmental impact like emissions.
I argue that what the world needs today is not decoupling but recoupling. It’s time to “recouple” (reintegrate) economic activities with people, communities, and the planet. Rather than mindlessly dematerialize our economy using technology, we must intentionally rematerialize our economy, making its gains feel real for everyday citizens. Instead of decoupling to boost our productivity, we must do recoupling to boost our humanity.
Such tight recoupling will enable a regenerative development model that will boost human development and increase social and ecological harmony and will lead us toward a conscious society (see Figure 1.3).10
By engaging in – and actively shaping – this virtuous growth cycle, businesses could serve a noble purpose that is larger than just profit-making.
Here is the hiccup: our existing economic system, which is built on capitalism, lacks the right values and mechanisms to enable the recoupling of business and society/planet.
Figure 1.3 Rather than mindlessly pursue unbridled economic growth, regenerative development balances economic activities with human development and social and ecological harmony, hence leading us to a conscious society.
Here are four reasons why capitalism – the operating system that runs our modern societies – is unfit to drive the kind of inclusive and sustainable growth I just described:11
First, capitalism exalts the virtues of private ownership, individualism, and competition, which motivate businesses to amass and hoard assets and compete ferociously with one another in a zero-sum game.
Second, it pursues relentlessly economies of scale (efficiencies) through mass production and global supply chains, which are gravely polluting and resource-hungry, and lack the flexibility and resilience to cope with catastrophic disruptions like COVID-19 or water scarcity.
12
Third, it incentivizes businesses to maximize short-term profits exclusively for shareholders instead of creating long-term value for all stakeholders, including local communities.
13
Fourth, capitalism fails to hold businesses accountable for the harmful consequences of their operations – known as
negative externalities
– such as social inequality and ecological degradation.
14
Given its fundamental and systemic flaws, we can’t rely on a dysfunctional capitalist economy to power inclusive and sustainable growth. We need to totally upgrade and reinvent the economic system that undergirds our societies to make it more efficient and agile, socially inclusive, and ecologically beneficial.
To build and sustain radically new business models and industry value chains that are truly beneficial to people, society, and the planet, we need a new operating system that I call a frugal economy.
A frugal economy strives to expand human awareness and create greater economic, social, and ecological value simultaneously while wisely optimizing the use of all available resources.
In contrast with the “do more with more” capitalistic system, which gobbles up ever more resources to pump out ever more useless products, the frugal economy strives to do better with less by making the most of all existing resources to maximize the value for all stakeholders.
A frugal economy responds to the needs of thrifty and socially conscious consumers who seek a simpler, healthier, and more eco-friendly lifestyle and want to deepen their community ties through active local engagement.
This frugal economy is not a utopian vision.
Using more than 100 inspiring real-life examples from all over the world, this book vividly shows how this multitrillion-dollar frugal economy is already emerging, fueled by three megatrends that will fundamentally reshape our societies in coming decades: business-to-business (B2B) sharing, distributed (decentralized) manufacturing and hyper-local value networks, and triple regeneration. See Figure 1.4. I will unpack these disruptive megatrends one by one in the first three parts of the book. In the fourth part, I will describe how these three megatrends are deeply reinventing the largest economy in the world: America.
In Part I, I will show how competing companies can learn to cooperate and share their physical and intangible resources to collectively maximize their value and have a positive impact on society and the planet.
Figure 1.4 Conscious customers and innovators fuel the rise of a frugal economy that enables the sharing of resources, localizes production, and regenerates people, places, and the planet.
In Part II, I will explain how businesses, especially in developed nations, can gain in resilience and agility by scaling out manufacturing and producing goods and services much closer to customers, which will benefit both the local economy and the environment.
In Part III, I will reveal how businesses and communities can go beyond sustainability and regenerate people, places, and the planet altogether synergistically, hence boosting the health and vitality of citizens, communities, and natural ecosystems.
Finally, in Part IV, I will inspire you by showing how across America – the most unfrugal society in the world – enlightened entrepreneurs, businesses, states, and counties are building from the ground up inclusive frugal economies that truly benefit people, society, and the planet.
I believe that building a frugal economy will have a civilizing effect on companies, enabling them to break bad habits and adopt new virtuous behaviors. For instance, today businesses compete with each other brutally and hoard resources selfishly. Instead, what if they collaborated and shared their resources so they can cocreate greater economic, social, and ecological benefits for all? Excitingly, this is already happening, and it’s called B2B sharing. Come discover it in Part I.
PART IThe B2B Sharing Revolution
CHAPTER 2The Big Benefits of B2B Sharing
Every crisis begets an opportunity. The Great Recession of 2008–2009 gave birth to the sharing economy, enabling individuals to use digital platforms like Uber, Airbnb, and BlaBlaCar to share their unused or underused cars and homes with others, thus generating additional income while maximizing the value of their assets.
This peer-to-peer or consumer-to-consumer (C2C) sharing economy took off so quickly that, in 2015, the audit and consulting firm PwC estimated that 18% of US adults had already partaken in the sharing economy as a consumer, and 7% had participated as a provider. PwC projected this C2C sharing economy to grow from $15 billion in 2013 to a whopping $335 billion by 2025.1
In 2024, as the world grapples with a “polycrisis” (multiple intersecting crises at once), what if businesses started sharing their physical and intangible resources with each other? Such a business-to-business (B2B) sharing economy, potentially worth trillions of dollars, is already emerging, fueled by greater environmental and social awareness and new technologies like artificial intelligence (AI) and the Internet of Things.2
B2B Sharing Boosts Business Efficiency, Agility, and Innovation
By sharing resources, businesses can do the following:
Avoid big capital investments.
Rather than waste their precious capital to build new factories and warehouses, manufacturers can rapidly and cost-effectively expand their supply chain capabilities by leveraging on-demand industrial marketplaces like Xometry, Fictiv, and Protolabs Network and flexible storage networks like Flowspace, Flexe, and SpaceFill.
3
Xometry, FacFox, Fictiv, and Protolabs Network are on-demand manufacturing marketplaces that connect thousands of highly specialized machine shops with global businesses, thus empowering the small industrial firms to keep their factories fully used, especially during a downturn.
Flowspace, Flexe, and SpaceFill are cloud-based, on-demand warehousing networks that link up businesses seeking warehouse space with firms that have underused storage space, enabling large companies as well as e-commerce startups to cost-effectively scale their distribution network and bring their products faster to customers. Flexe estimates that companies using its on-demand logistics services to fulfill online orders save 10% in warehousing costs, reduce last-mile transportation costs by 10%, and increase e-commerce revenues by 20% – all this without making a big fixed-cost investment.4
Reduce operating costs.
By pooling buying power and signing collective long-term contracts with shared suppliers, firms can curb their operating expenses while stabilizing the supply of critical materials. For instance, Civica Rx is a nonprofit group in the US that aggregates 1,550 hospitals’ demands to reduce cost of generic drugs and vaccines by up to 90% for all its members and their patients. Likewise, rather than sign a long-term costly commercial lease, companies can rent additional office space on demand from workplace sharing platforms like Breather and LiquidSpace. Floow2 and Rheaply have built digital platforms that enable hospitals to share their underused medical equipment and services, thus maximizing their asset use, reducing operating costs, and boosting patient care quality. In the Netherlands, pharmacists use PharmaSwap to share with each other soon-to-expire drugs, hence reducing their waste and avoiding costly inventory write-offs.
Generate new revenue streams.
Thirty percent of all warehouse space in the US – and 50% in Asia – is unused at any time. Nearly 20% of office property across America today is empty, the highest vacancy rate since 1979.
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Thirty-five percent of trucks on US roads run empty.
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The owners of these underused facilities and vehicles can make money by renting them to other companies desperately seeking additional storage, workspace, or shipping capacity. Sennder, Vahak, TruggHub, and Trella are the Uber for trucking: their AI-based freight networks automatically connect shippers with carriers to move millions of truckloads effectively, helping shippers reduce freight cost and enabling truck drivers to earn more.
Maximize the value of intangible assets.
In today’s knowledge economy, businesses can extract greater value from their intangible assets like intellectual property (patents, copyrights, and know-how) by sharing them with others. Each year, US firms lose $1 trillion in IP value because they lack a sound commercial strategy to monetize their inventions. IP-rich firms can leverage brokering services like
yet2.com
and NineSigma to generate profit from their unused intellectual assets like patents by licensing them to innovation-hungry businesses.
Boost agility and resilience.
During recessions and pandemics like COVID-19, as customer demand nose-dives, small manufacturers are stuck with idle factory capacity and underemployed workforce. On-demand industrial marketplaces like Xometry and Protolabs Network make these small firms resilient by linking them up rapidly with new clients so they keep their machine shops and employees fully used. Likewise, Hyver, Hydres, and Teambix are talent-sharing platforms that enable businesses to temporary “lend” their underused employees to other companies in need of additional human resources. They also facilitate the professional mobility of workers who wish to leave their current employers to expand their career elsewhere.
Innovate faster, better, cheaper.
Ninety-five percent of new consumer products fail at launch because they don’t meet actual customer needs, leaving brands with costly unsold stock.
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Instead of guessing consumer preferences and mass-producing the
wrong
products faster, brands could use platforms such as The Storefront and Appear Here to set up pop-up stores in multiple strategic locations to test a wide variety of new product concepts with customers. Brands can then selectively scale up the production of only those concepts that customers really like.
Satisfy customers seeking end-to-end solutions.
Instead of point solutions, customers are seeking end-to-end tailored solutions from multiple brands that extensively address their broader needs in mobility, finance, and wellness. For instance, there is a growing need for point-to-point mobility solutions that seamlessly integrate car sharing, train and bus rides, and rental bikes. By sharing and integrating data on their assets and customers with each other, companies from different sectors can synergistically deliver a seamless experience to their shared clients.
As these examples show, by sharing their physical and intangible resources with each other, companies can do better with less, that is, increase their revenue and agility while drastically reducing their operating costs and waste
Given all these benefits from sharing resources, it’s not surprising that, according to a business.com survey, nearly 70% of companies today engage in the B2B sharing economy in one form or another at least once a month, with 26% using these services daily.8 Forty percent said sharing resources with other companies reduced their expenses and 18% reported it saves them time.
B2B transactions – whether offline or online – are significantly larger in volume and value than B2C transactions. According to Statista, the global B2B e-commerce market is valued at $17.9 trillion in 2021, which is more than five times larger than the B2C market. In the past, B2B evolved slower than B2C. But the growing need for speed, agility, and sustainability is driving many companies to double down on B2B collaboration to serve their customers faster, better, and cheaper. As such, in the coming decade, I estimate that B2B sharing could unleash well over $3 trillion in economic value, dwarfing the C2C sharing economy, which will reach just $335 billion by 2025 (see Figure 2.1).
Figure 2.1 B2B sharing could dwarf the C2C sharing economy in volume and value.
The Social and Ecological Benefits of B2B Sharing
Beyond the purely economic gains for companies, B2B sharing can also have a major positive social impact, especially in historically excluded or underdeveloped communities, for several reasons.
First, B2B sharing networks and platforms catalyze the creation of new jobs, especially for marginalized groups, and help preserve local jobs and skills within regional economies. Take industrial symbiosis (IS), a sustainable practice whereby several colocated companies from different sectors share their materials, waste, and energy in a synergistic manner. IS initiatives like FE21 in northeast France and WISP in South Africa employ hundreds of underprivileged people to recycle their waste, hence regenerating local communities. Similarly, employee sharing platforms like Talent Sharing Platform in the east of England and Genesis in France avoid laying off underused workers and keep them fully employed by integrating them into other companies in the same city or region. In doing so, they also preserve valuable skills and know-how locally, hence avoiding a “brain drain.”
Second, B2B sharing enables artisans, small farmers, and small and medium enterprises (SMEs) – the most valuable and the most vulnerable segments of our economy – to increase their resilience, agility, and performance by gaining access to assets and skills from other companies at lower cost. Take, for instance, the farming sector. Hello Tractor is an online platform that operates as an “Uber for small farmers” across Africa; it provides them access to tractors and other farm equipment on a flexible pay-per-use basis. This frugal and flexible tractor-on-demand service enables financially strapped African farmers to plant 40 times faster and 2.5 times cheaper than conventional manual methods, hence achieving 63% in savings and a three-time increase in yield.9 Similarly, Digital Green is a knowledge-sharing platform that enables millions of small farmers in India, Africa, and South America to share impactful agricultural best practices and innovations directly with each other, which has resulted in an increase of 24% to 74% yield across various commodities.10
Third, B2B sharing can improve the well-being of all citizens. Take the example of digital platforms like Floow2 and Cohealo, which allow hospitals to share their medical equipment and services (hospitals use most medical devices only 42% of the time). Thanks to these platforms, anxious patients can get quality care faster by going directly to a hospital with the right equipment and readily available staff to treat them without delay. For instance, Intrakoop, the leading Dutch health care procurement cooperative, runs a sharing marketplace built on Floow2 technology that enables 550 hospitals and long-term care providers across the Netherlands to share their underused goods and services with other members. Likewise, Figure 1 is an online social networking service that enables 3 million health care professionals in 190 countries to share (anonymized) medical images and collaboratively and rapidly solve complex patient cases. Forty percent of clinicians who can’t resolve a patient case on their own find a resolution through peer-to-peer collaboration on Figure 1.
Similarly, with most senior citizens’ interest in “aging in place” – living in their own home independently and comfortably as long as possible – companies and local authorities can share their expertise and pool their resources through multisector initiatives like the MIT AgeLab C3 Connected Home Logistics Consortium to cocreate end-to-end wellness solutions to improve the quality of life of seniors at home. During COVID-19, pioneering B2B sharing initiatives around the world saved thousands of lives and enhanced the well-being of many citizens (see “B2B Sharing Battles COVID-19 and Saves Lives”).
B2B Sharing Battles COVID-19 and Saves Lives
Here are three major B2B sharing initiatives launched in 2020, against the backdrop of the COVID-19 pandemic, that demonstrate powerfully the positive social impact that B2B sharing can achieve on a large scale in a region or an entire country:
China.
In January 2020, as the COVID-19 pandemic engulfed China, hundreds of hotels, cinemas, and restaurants shut down and thousands of their employees were either put on furlough or laid off. Meanwhile, Hema, a digitally savvy supermarket chain founded by Chinese billionaire Jack Ma’s Alibaba group, was facing a labor shortage as it struggled to keep up with a surge in online orders for groceries delivery. To solve its labor crunch, Hema entered into an employee-sharing agreement with caterers, hotels, cinemas, and restaurants to hire their idle workers on a short-term basis to prepare and deliver groceries. By late April 2020, 2,700 workers from 40 other companies were employed at Hema under the job-sharing plan. Inspired by Hema, other online retailers and supermarket chains in China like Ele, Carrefour, Walmart, Meituan, JD’s 7Fresh also borrowed employees from restaurants and other businesses.
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US.
On April 1, 2020, Ohio State Governor Mike DeWine announced the launch of the Ohio Manufacturing Alliance to Fight COVID-19 (OMAFC) to respond to the major shortage in the state of personal protective equipment (PPE) like face shields, isolation gowns, and masks. The OMAFC was co-led by the Ohio Manufacturers’ Association (OMA), the Ohio Manufacturing Extension Partnership (and its partner organization MAGNET), the Ohio Hospital Association, and JobsOhio.
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